There was no doubt that some discretionary income of U.S. consumers that typically would have been spent wagering on the NBA, NHL, and MLB this spring would be spent on lesser-known sports. But in last week’s DraftKings second-quarter earnings report, CEO Jason Robins laid out what he called “fantastic statistics” that exceeded quite a few projections.
“Top NASCAR races, which traditionally has been a niche sport for us, saw similar action to popular NBA regular season games,” Robins told gambling industry analysts on a one-hour conference call on Friday.
And while DraftKings’ previous betting record for a golf event in the past two years was the 2019 U.S. Open, since the PGA Tour resumed in June, six events — most of which would be mid-level or lower in quality in a typical year — topped those figures.
So did “The Match 2” in late May, when Tiger Woods avenged a previous head-to-head loss to Phil Mickelson by teaming up with ex-NFL quarterback Peyton Manning to knock off Mickelson and Tampa Bay quarterback Tom Brady. Robins said the prominent broadcast of live, “in-play” odds helped boost The Match 2 to record handle and showed that such a presentation “just scratches the surface.”
Robins said UFC bouts in May and June “more than tripled” the previous top month for wagering handle at DraftKings.
Team sports take it up a notch
The boost continued when some key sports returned. The July 23 season opener between the New York Yankees and the Washington Nationals broke ESPN’s record for a Day 1 MLB telecast and was the most watched regular season game on any network in nine years. DraftKings MLB handle also tripled in the first two weeks of the season vs. the same period in 2019.
The NHL returned to “play-in playoffs” on Aug. 1, and those first-week games produced more than twice the handle of early-2019 NHL playoff games on DraftKings.
For the NBA, four of the top five highest handle nights of the 2019-20 regular season came in the first few days of the league’s return in late July, Robins added.
No escaping 2Q losses, however
But none of that could wipe away the disastrous effect of COVID-19 on the company’s bottom line. The loss of NCAA March Madness revenue and the dearth of events from March through most of July propelled second-quarter losses of $161.4 million, compared to a $28.1 million loss in 2Q 2019.
That figure was far worse than industry analysts had forecast, though 2Q revenue rose to $70.9 million from $57.4 million, topping the consensus forecast of $66.4 million.
Robins projected second-half 2020 revenue of $500 million to $540 million — for growth of 22%-37%.
“This guidance assumes that the professional sports calendar remains as currently contemplated and that DraftKings operates in the states in which it is currently live,” the company said. “DraftKings at this time does not anticipate an impact to its long-term plans due to COVID-19.”
Robins said those revenue projections include no college football, but he added that he still had hopes for limited action on that front.
The loss of college football would not be the disaster for DraftKings that some might think, Robins suggested.
“The NFL is orders of magnitude larger than college football, which is our fifth-largest sport” in terms of wagering, Robins said.
DraftKings CEO comments roundup
Other comments from Robins:
- He believes that “eSports [betting] is going to be a huge category — it’s ‘when’ and not ‘if.'”
- Launching standalone DraftKings Casino apps in states such as New Jersey and West Virginia provides more flexibility because of the number of gamblers who primarily focus on casino play, while others mainly are interested in sports betting.
- Online casino revenue — which outpaced mobile sports betting in New Jersey even before the pandemic struck — “perhaps is a bigger opportunity than we were giving them credit for.”
- Offering of incentives, such as the one in multiple states this month that wound up with a free bet of $74 to anyone who risked a dollar or more on a Nuggets-Lakers game, can tempt consumers to keep shopping for such deals, Robins conceded. But he added that such deal chasers appear to be “a small percentage of the market,” and that a quality product with an ease of use can outweigh the “headache” of monitoring numerous accounts.
- DraftKings went public in April in a merger with SBTech and Diamond Eagle Acquisition Corp., and Robins said that merger leaves the company “well-capitalized” and at a point where “we don’t need to make a big purchase — or any purchase, for that matter.” But his company remains “bullish on the overall market” of U.S. gambling expansion, Robins said, so “opportunistic” acquisitions will remain a possibility.
- Robins ended the call stressing the company’s bottom line: $1.2 billion in cash and no debt.